Energy news in general

Sea_Shell

Thanks.  I'll have a proper read when I'm next on the laptop..and I've had my morning coffee!!

[Deleted User]

bristolleedsfan said:

Deleted_User said:

The headline catcher for me is that it seems that we, as customers, will now cop for our share of all the additional default levy costs early, in April 2022. Previously it was thought that it would probably be later than that. Good news for the big suppliers, but bad news for customers. I think we can see where Ofgem’s priorities lie.

That is good news for customers as far as Winter 2022 energy cap is concerned.

Go on, then. Enlighten me. 

Thrugelmir

QrizB said:

Sea_Shell said:

QrizB said:

Missed in all the excitement yesterday:

https://www.ofgem.gov.uk/publications/decision-letter-supplier-last-resort-levy-claims

Having considered all the responses and in light of the broad level of support we received, and our continued view that we need to make the temporary changes we set out in our letter to maintain the SoLR process and protect consumers through the current extreme market conditions, we intend to proceed with our proposal.
Therefore, unless they waived their right to claim on the SoLR levy, we invite SoLRs that have been appointed since 1 September 2021 to submit claims for costs they have incurred in supplying SOLR customers under their Direction(s) by 0900 on 6 December for Ofgem to review. We aim to decide upon these claims by Friday 17 December. This will enable networks to reflect levy claims in their charges from April and repay SoLRs from May. SoLRs who are unable to make this deadline can still submit claims, however we cannot guarantee that they will be approved by the required deadline for recovery next year.

So we should get our first look at the SoLR costs before Christmas, assuming Ofgem publishes their decisions on their website (like they have previously).

Is their any cap (within the cap) on the additional costs that could be levied on all our bills to pay for this?
Or has a precedent never been set?

There isn't a cap but the SoLRs can only claim reasonable costs for the things that they said they'd claim for when they were offered to be SoLRs. The first couple of paragraphs on page 6 of the document discuss this, and the explanation on page 9-10.

There's also an interesting discussion of wholesale costs on page 7.

And the timeline on page 9 shows that only the initial claims will be added to the levy in April 2022; the second claims will be levied from April 2023. So we're all going to be paying for these failures until March 2024.

Levies will continue to run until they've achieved their purpose. That includes reimbursing public funds. 

[Deleted User]

Yes, don’t forget we’ve all to pay to prop up Bulb as well, by one means or another. Theoretically until Bulb becomes attractive enough for one of the other companies to buy out. What if that is never the case? 

QrizB

Deleted_User said:

Yes, don’t forget we’ve all to pay to prop up Bulb as well, by one means or another. Theoretically until Bulb becomes attractive enough for one of the other companies to buy out. What if that is never the case? 

I guess Bulb's tariff will continue to match the cap. Eventually either Bulb will be profitable or all their customers will leave, and in eirther case it will stop being a problem for the taxpayer.

Sea_Shell

I've read the letter.    

One thing occurs to me, and I'm not sure if it's covered in the letter (can't see for looking?)

Each affected supplier is able to make a claim for "reasonable costs".
These will differ massively between suppliers, depending on how many SoLR customers they have taken on.
Will these costs be reclaimable by each individual supplier, or will they be aggregated by OFGEM across the market?

Surely they'd have to be aggregated, otherwise the really big suppliers will be trying to pass on much bigger costs than the smaller suppliers.

(if this is stated, can someone point it out to the hard of seeing - thanks - that's a 2 coffee document!!)

[Deleted User]

Sea_Shell said:

I've read the letter.    

One thing occurs to me, and I'm not sure if it's covered in the letter (can't see for looking?)

Each affected supplier is able to make a claim for "reasonable costs".
These will differ massively between suppliers, depending on how many SoLR customers they have taken on.
Will these costs be reclaimable by each individual supplier, or will they be aggregated by OFGEM across the market?

Surely they'd have to be aggregated, otherwise the really big suppliers will be trying to pass on much bigger costs than the smaller suppliers.

(if this is stated, can someone point it out to the hard of seeing - thanks - that's a 2 coffee document!!)

As I understand it, the costs are passed on to the National Grid which, in turn, are then passed on to energy companies in the form of Grid charges. I would assume that these charges are pro-rated based on the amount of energy that each supplier supplies. 

Reasonable costs can include, inter alia, the extra administrative costs of taking on customers from a failed supplier; the additional costs of buying in extra energy to support the new customer base, and the costs associated with the Consumer Levy. To a degree, these costs will be offset by a saving in referral fees. Some experts are suggesting that these extra costs could be as high as £300 for every SoLR consumer. 

Edit: I should have added that Ofgem will also seek to recover any outstanding Green taxes that the failed supplier hasn’t paid.

https://www.citizensadvice.org.uk/about-us/about-us1/media/press-releases/failed-energy-suppliers-cost-consumers-255m-since-2018-says-citizens-advice/

Ignite

Deleted_User said:

II also noted that Ofgem was considering raising the application bar for supplier licences, and making them incorporate hedging in their business models and procedures. Stable, door, bolted, there I think. You have to laugh, or else you’d cry. 

And does hedging work?  Nope.   We have seen companies like Zog who had hedged go out of business when the supplier that they had hedged with goes down the pan.  Hedging does help but it is not the only answer to the problems.

[Deleted User]

Ignite said:

Deleted_User said:

II also noted that Ofgem was considering raising the application bar for supplier licences, and making them incorporate hedging in their business models and procedures. Stable, door, bolted, there I think. You have to laugh, or else you’d cry. 

And does hedging work?  Nope.   We have seen companies like Zog who had hedged go out of business when the supplier that they had hedged with goes down the pan.  Hedging does help but it is not the only answer to the problems.

This has been a ‘perfect storm’. The great unanswered question is whether the Government’s inaction will result in higher future bills than would have been the case had either the Cap been raised, or financial support offered?  I believe that we will all be paying SoLR special payments for some years to come.

[Deleted User]

The estimate for what this is going to cost each customer extra on average, has already gone up from previous forecasts of £100 to £240. Plus it looks like we are tied in to this process for at least a couple of years. 

Conversely, I have EVERY confidence that if the wholesale market stabilises, and costs come down, those reductions will be passed on to the customer. Does anything ever come down?